• Australia's Prime Minister, Mr Malcolm Turnbull, announced today that the federal election will be held on July 2nd, as had been widely flagged.  Housing affordability has already emerged as one of the key battlelines between the Coalition government and ALP.   Concerns about housing affordability have also fed concerns about Australia's 'big short'; the prospect of an imminent collapse in residential property prices.
• In this post, Evidente challenges the conventional wisdom that the great Australian dream is beyond the reach of many young Australians.  The misunderstanding arises from the behavioural heuristic known as availability; people discount the powerful effect of low mortgage rates compounded over a 25 year home loan and focus instead on the 'sticker shock' associated with record house prices that are up front, more vivid and attract media attention.  Following the recent cut to Australian official interest rates on May 2nd, I show that a typical house is now more affordable for a typical household than a decade ago, thanks to record low interest rates. 
• Evidente has previously suggested that if there was a bubble in Australia's residential property markets,  it might well persist due to an extended period of low interest rates and concluded that hedge funds seeking to capitalise on Australia's 'big short' would need an abundance of patience (and capital).  The analysis here confirms there is no crisis in housing affordability and that the 'big short' is a myth.

This insight is part of Smartkarma. For more follow this link.